A new report by CBRE Investment Management has looked at the poor demographics in major global economies and assessed how it will affect those countries different real estate sectors.

For example, when looking at the demographics of Japan, it discovered that, while many property investors might shy away from the country because of its shrinking population, the country has continued to urbanise, which has led to a shortage of residential rental properties in Tokyo, particularly units priced for young professionals. Below is a summary of some of the key global economies and how their real estate markets are being impacted by demographics.

Japan
The Japanese market is in many ways a foreshadow of what is to come for the developed world in the West. Its population peaked at 128.6m in 2009 and has since fallen by 3m. The childhood cohort was the first to fall, with the decline beginning in the early-80s. This then flowed into sustained declines in the tertiary education cohorts in the mid-90s and the working age population in the late 2000s.

In 2020, the working-age cohort fell to less than half of the overall population: a first for a G7 nation, and that proportion is expected to continue to fall until it reaches around 41% in the 2040s.
Despite a falling overall and working age population, Japan has remained a relatively attractive market for property investment given continued urbanisation and relatively low interest rates. As a result, residential and logistical property in Tokyo, which has a population of 37m, have remained attractive.

The report states: ‘Even with a stable or even slowly shrinking population, Greater Tokyo will remain one of the largest urban centres in the world, and the opportunities of servicing that population’s real assets needs will remain attractive. In addition, one might expect the market for privately owned retirement facilities to prove attractive, especially if advanced robotics and/or laxer immigration policies resolve the issue of labour.’